The demand for psychedelic substances has been growing gradually over the past few years, and it is anticipated to accelerate exponentially in the next few years. The main factors driving market demand during this projection period are the increased incidence of mental depression and anxiety and the accessibility to off-label medications. The cannabis sector, though, looks to be undergoing a reset and cannot boast of a heightened demand or special market actions at this time.
While both businesses have their limitations, the psychedelics industry is moving toward widespread acceptability more quickly than cannabis did in its early years. As it emphasizes how much it may aid in treating mental health disorders, psychedelics remain loyal to their medicinal beginnings. On the other side, cannabis’ focus appears to be split between medicinal and recreational usage, with the desire to experience high taking precedence merely.
America’s Psychedelic Industry
In the United States, other names for psychedelic drugs include dots, blotter, acid, sugar, trips, and LSD (lysergic acid derivative). Psychedelic substances can alter or improve one’s sensory impressions, mental processes, level of energy and have even been shown to increase spiritual experiences. Drugs that are empathogens, dissociative (like PCP), and serotonergic (classic hallucinogens) like LSD are all examples of psychedelics. Generally, there are two sorts of psychedelic drugs: natural and synthetic. Severe depression, post-traumatic stress disorder, anxiety, treatment-resistant depression, and opiate addiction are just a few of the conditions these medications treat. SIGA Technologies Inc., Intercept Pharmaceuticals, SciSparc Ltd., Cassava Sciences, Inc., AbbVie, Jazz Pharmaceuticals, Inc., COMPASS, Hoffmann-La Roche Ltd, Hikma Pharmaceuticals PLC, NeuroRx, Inc., PharmaTher Inc., Mind Medicine, Inc., Cybin Corp., GABA Therapeutics, Inc., EmpathBio, DemeRx are active companies in the market today.
As efforts to decriminalize psychedelics across the US continue and larger psychedelics legalization movements accelerate, the psychedelics sector continues to draw entrepreneurs with substantial capital.
Setbacks in the Cannabis Industry
The cannabis sector is experiencing some of the same challenges that every developing, maturing company does, including hostile takeovers, unclear legislation, especially crucial political problems pertaining to who controls and regulates the market, and an expanding number of litigation. It is already over ten years since Colorado and Washington became the first states to establish legal marketplaces for anybody at least 21 years old. Yet, most cannabis businesses are still bleeding cash. The major publicly traded U.S. operators, according to an examination of their financial reports, lost more than $550 million in total in the first half of 2022 while having around $4.5 billion in sales.
According to the reports from Politico, cannabis businesses invested extensively in capacity expansion in 2020 and 2021 because they were mistakenly optimistic about the likelihood that federal marijuana laws would be relaxed after Democrats took control of Congress and the White House. In several of the biggest state marketplaces, including California, Colorado, Massachusetts, and Michigan, there was a surplus of products, which caused prices to fall.
It is worth emphasizing that the cannabis black market remains a major stumbling block to the success of the cannabis industry, particularly in California. According to estimations, the illegal cannabis industry in that state alone generated sales of over $8.7 billion in 2019, while the legal cannabis business generated less than 50 percent of this with about $3.1 billion, per Statista.
As psychedelics decriminalization campaigns continue across the U.S. and broader psychedelics legalization efforts accelerate in states like Colorado. Several states, including Colorado, included cannabis reform measures in the ballots in the just-concluded mid-term elections. This could spur even faster growth for the U.S cannabis market while the psychedelics industry continues to draw investors with similar bankrolls.
Support For Psychedelics
From 2006 through 2020, the National Institutes of Health mostly disregarded psychedelics, but as of October 2021, the American government seems to be fully behind the development of psychedelics as the national health department stepped in by awarding Johns Hopkins a $4 million grant (financed by the NIH’s National Institute on Drug Abuse) to investigate psilocybin and tobacco addiction. Other instances of government and business focusing on developing the psychedelics sector as the cannabis sector struggles can be found. Still, many of these issues will be resolved over the next two years as a series of advancing psychedelics clinical trials could swiftly result in FDA approval and drug development by late 2024.
Another credible instance is when the University of North Carolina and Dr. Bryan L. Roth (with the UNC Eshelman School of Pharmacy) received a nearly $27 million grant from the U.S. Defense Advanced Research Project Agency (DARPA) in to develop better drugs for treating mental illness using psychedelics and other psychoactive molecules. The project will build on ongoing research at UNC to provide new methods for completely comprehending how medications could alter cellular signaling pathways and produce more potent drugs.
Recent Developments and Projections For The Psychedelics Market
The Centre for Mental Health Research and Innovation (“the Centre”) got established by COMPASS Pathways plc in March 2022 to advance psychedelic research and generate new methods for treating mental illness. The Center’s mission can promote the development of psychedelic therapies, advance therapist education and certification, assess empirical data, and develop digital tools to support customized, authoritarian, and preventive care models. Additionally, an exclusive licensing contract was signed by iX Biopharma Ltd. and Seelos Therapeutics, Inc. in November 2021.
During the projection period of 2022-2029, the market for psychedelic drugs is anticipated to increase. According to Data Bridge Market Research’s analysis, the market is predicted to increase by 13.3% between 2022 and 2029, from $2.4 billion in 2021 to $6.5 billion in 2029.
Although the cannabis industry is shaky at the moment, there’s no doubt that it has established itself as one of the fastest-growing industries worldwide. Investors have observed the same trajectory playing out in the psychedelics industry and are moving in droves to take advantage of this opportunity. Thanks to the global need for effective mental health medications, widespread public support, and emerging psychedelics and cannabis legislation, investors are hopeful that the industry can meet the projections.
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